Why Subscribe to Ironside Equity Research?
There are a lot of newsletters out there on the market. Like, a lot. We know. But if you want just another link-dump alert in your inbox that you go numb to after a few weeks and then unsubscribe to a year or two later after mindlessly deleting them, you should look elsewhere.
Ironside Research provides our Almost Daily Market Brief—a short market analysis email with useful information presented in a readable format, as well as individual equity deep dives and Idea Roundups which compile some of the more interesting theses I come across.
Investment Philosophy & Previous Calls
(If you don’t care about investment philosophy [though you should!], jump down to the next section for some info on my previous calls.)
Investing is hard. Really hard. But you already knew that. In my experience, half the battle is just having a consistent game plan to find opportunities.
Here are a few of the major tenets I (and the writings of this blog) adhere to:
Management teams should not be trusted. Or, maybe put in a nicer way, it should be very, very difficult for a management team to earn the trust of an investor. Investing, in a sense, is quite adversarial: until you know for sure that the folks running the company are properly motivated and aligned with their shareholders then you should assume (as I will) that the alignment is not there and further investigation of management’s statements are required.
Story stocks are tough. It’s the job of a company to communicate its business and how it excels at what it does to the investing community. I’ve yet to come across a company that said, “you know, we’re kind of the number two operator in this space. Our product just isn’t as good, and we aren’t as efficient as the other guys, but don’t worry, we’ll still be around in a few years.” Every company will tout their wins as bigger than they are, and twist failures into minor victories (if shortcomings are addressed at all).
The market is very, very efficient—but not completely so. There is alpha to be generated in the market. First of all, without this assumption it would be very difficult to do my job, and second of all, the proof is all around us. Each and every quarter, each and every year, companies that everyone expects to do well fail, and companies which aren’t shiny enough to be on everyone’s radar excel. Very often these unsung companies will only get attention once the value is already baked in. The CNBC effect is real.
The only—I repeat, only—function of a business is to generate cash for shareholders. Some business go on forever, losing money and issuing new debt and equity, hoping that Twitter or CNBC will hype them up and buy into promises of future profitability. Investors should have very high bars of skepticism when approaching these stocks.
Great. So Does That Translate To Performance?
I also write over at Seeking Alpha (check it out here), where you can read my ideas.
Here are some of the highest-conviction calls I’ve made (and no, not every call I’ve made has been profitable, let’s just get that out of the way right now [for full transparency check out some of my ideas that haven’t worked out here and here]):
Google
In early January, Google was cheap. Really cheap. After the Tech Wreck of 2022, Google’s valuation made no sense to me—the company was still a cash flow machine with a best in class offering and passing concerns about the company’s advertising business. Since I first covered the stock, it’s appreciated by 30%.
Paramount
On April 26th, I wrote that Paramount’s premium valuation to peers made little sense, especially given the potential value of its intellectual property. The stock dropped on earnings shortly after is down 48% after I covered it.
Super Micro Computer
Super Micro Computer is a part-chip-part-AI story. Based on rising geopolitical tensions in the space and the secular demand for the company’s products, I covered the stock positively in February 2023. It’s beat all expectations I had for it by surging 193% so far this year.
Digital Ocean
Digital Ocean had impressed investors and analysts alike with its earnings beats. A look under the hood, though, revealed that the input costs of its business were rising faster than its sales, something I thought was unsustainable. It’s down 53% since.
A quick disclaimer is in order as well: nothing I write is intended to be investment advice or a solicitation to buy or sell any security at any time. This writing represents my opinion at a certain time and reflects my interpretation of the information available to me. Always conduct due diligence before investing, which carries a risk of loss. There are no guarantees!
